End-of-summer sale
A modest 2.63% recovery on the Warsaw Stock Exchange's (WSE) IT-heavy TechWIG last week offered an inkling of proof that traders are returning from their summer holidays.
"Now they're coming back to Poland and they're saying, 'Wow, prices are 15-20% below what I hoped to buy these stocks for,'" said Pawel Puchalski, an analyst with Raiffeisen Capital & Investment Polska.
Volumes were up overall, with the all-share WIG index recording a 15.73% rise in turnover to zl. 434.5 million ($101 million), or 0.7% higher than the previous week to 18,404.7 points.
Power and telecom conglomerate Elektrim, up 3.35% to zl. 49.40, was one of the most actively traded stocks of the week, especially when most analysts were valuing it at zl. 70-zl. 75 per share, he said.
Another stock Puchalski recommended keeping an eye on was pharmaceutical distributor Prosper, up 6.43% to zl. 14.90. With good market share and solid financials, the company is highly undervalued and should grow 15-20% in the near future, he said.
One stock that lost out during the week was aluminum processing firm Kety, down 14.64% to zl. 41.40. The stock plunged by the single-day 10% maximum Friday after Kety reduced its 2000 earnings forecast by more than 50% from zl. 71 million ($16.5 million) to zl. 31 million ($7.2 million), Puchalski said.
But while some are predicting further losses for the "old economy" company, Puchalski didn't agree. "This is a great time to accumulate the stock," he said. "I don't think there will be another minus 10 on Monday, not after what I've seen on my monitor."
Though selling is keeping Kety's share value down, some investors are buying low and holding on to the stock, he said.
Kety is an active participant in a growing market, Puchalski said, and will prosper even if it only manages to hold on to its current market share.
Another loser was the insurer Towarzystwo Ubezpieczen i Reasekuracji Warta. It finished the week at zl. 135, down 11.8%, after majority owner Kulczyk Holding bought a 10.6% stake from one of Warta's shareholders, Franklin Recourses Group last Thursday.
"It was a large packet to sell off but a small one for gaining anything," said Artur Szeski, an analyst at CDM Pekao Securities. Templeton's investment funds didn't have much need for Warta shares any longer, he said. In an upcoming share issue, the Templeton stake would have been smaller and even less liquid than it is now, and it was obvious Kulczyk was setting conditions up during the transactions, Szeski said.
Today, Kulczyk along with its dependent entity Euro Agro Centrum owns 82.52% of Warta shares. Belgian KBC Verzekeringen owns 4.95%, and Anna Wozniak-Starak 5%.
Also last week, an extraordinary meeting of Warta's shareholders passed a resolution on the share issue, whose subscription will start Oct. 1. According to the resolution, the current number of 6.06 million outstanding shares will be extended by 650,000 to 2.1 million. The issue will be aimed at Kulczyk or the sector investor, or both. "Of course, the resolution was taken, but we don't have any certainty whether the new issue will take place," Szeski said. According to him, Warta needs sector investor. "(Jan) Kulczyk is a thinking person," he said. "After all, he is not a insurance specialist and Warta's staff potential doesn't guarantee success while Warta's market share is decreasing."
Speculation on the market last week suggested that Warta's sector investor could be French-based insurer AXA. "And there is no reason not to believe it," Szeski said.
